One of the additional coverages under the building and personal property coverage form is “increased cost of construction.” The coverage is payable if A) a skilled artisan is needed to duplicate the construction of the damaged property. B) a labor strike or materials shortage increases construction costs. C) an ordinance or building code increases the […]
An understanding of how the company’s cost of capital is determined is one of the fundamental concepts that a nonfinancial manager should understand in order to: A) better assess the current environment in which the firm operates. B) better assess future financing requirements. C) better understand the role of capital markets in raising long-term funds. […]
________ is measured by the proportional amount of debt in the firm’s capital structure. A) Relative risk B) Business risk C) Operating risk D) Financial risk ANSWER D
The statement of cash flow explains the changes that took place in the firm’s cash balance over the period of interest. Indicate whether the statement is true or false ANSWER TRUE
Private placements usually have several advantages associated with them, but also tend to suffer from specific disadvantages. Which of the following is a disadvantage of a private placement when compared to other methods of selling new securities? A) avoidance of registration with the SEC B) higher interest costs C) reduced flotation costs D) strictly standardized […]
Private placements are A) available for both debt and equity securities, but the market is dominated by equity issues. B) limited to equity securities. C) especially appealing to new, small, and medium-sized companies. D) limited to debt securities. ANSWER C
________ and operating risk are one in the same and are reflected in the projected variability of the earnings of the firm regardless of how the firm is financed. A) Business risk B) Financial risk C) Exchange rate risk D) Risk of equity ANSWER A
Company unique risk can be virtually eliminated with a portfolio consisting of approximately 20 securities. Indicate whether the statement is true or false ANSWER TRUE
A limited partnership provides limited liability to A) only to limited partners who do not participate in the management of the business. B) all partners. C) only limited partners responsible for day to day management of the firm. D) all general partners. ANSWER A
Financial statement analysis is one of the fundamental concepts that a nonfinancial manager should understand in order to: A) better assess the current environment in which the firm operates. B) better assess the future financing requirements. C) better understand the role of capital markets in raising long-term funds. D) better measure and create value for […]
